The malign influence of non-profits

The political influence of big business is often, and justly, maligned. But there are cases where the (theoretically) not-for-profit nature of certain large organizations gives them a political reach far in excess of what an equivalent for-profit company would have – and it’s an influence that has been used for unfortunate purposes.

Theoretically, I’m a member of the largest club in Victoria – the Royal Automobile Club of Victoria, otherwise known as the RACV. For 60-odd dollars a year, they’ll assist if your car breaks down on the side of the road – something that happens increasingly rarely, but it’s still arguably a handy service. Oh, and I also get a monthly copy of RoyalAuto, which features endless road tests of Toyota Camries and “secret weekend driving holidays” to the “captivating Western District”. All it’s missing is a fashion section on the latest trends in cardigans.

But my nominal “membership” of the RACV, and the mouthpiece that RoyalAuto and the equivalent publications of the other state-based motoring associations, seems to give them the ear of governments state and federal.

So what do they do with their influence? For a start, the mainly NSW-based NRMA seem to be fans of conspiracy theories about the price of petrol. The RACV doesn’t go for this, but want big cuts in fuel excise. Then it’s endless screaming for more road funding. And all of this political lobbying funded out of “members” who, mainly, just want assistance if they break down. As the Wikipedia article on the NRMA notes, despite the demutualisation of the insurance business of 2000, the association continues to run an ever-growing range of commercial activities; the RACV has a similarly broad range.

So, through historical accident, we have multi-million dollar businesses, with nowhere to spend their profits other than political lobbying, with mouthpieces that reach hundreds of thousands of people every month (at least in the case of the RACV). They represent a substantial obstacle to sensible transport policy. Does anybody know of companies or organizations that provide similar services but don’t bundle free donations to the road lobby with their product?

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37 comments on “The malign influence of non-profits”

Tsk. Who’d have thought that organisations that provide member services, organise politically for to achieve structural goals, and maintain large membership bases, would take advantage of their position in the Party system. It’s disgraceful the way they think of cheap, accessible road transport as somehow part of the Australian settlement, or a part of the twentieth-century Australian tradition of the middle- and working-class ‘fair go’.
They’ll think they’re trade unions, next.

The NRMA “Open Road” magazine is bloody hopeless. Until recently at least fuel economy was barely mentioned when they reviewed cars. In one review in the body of the text they did say it was “very thirsty” and in the little wrap up of pros and cons didn’t even mention poor fuel economy.

FOR FUCKS SAKE!

If they are so bloody concerned about fuel prices they should advise people to buy cars that consume less of the stuff! People go mad for the stupid 4c/L vouchers. How is this for a voucher .. say you own a holden commodore, mitsubishi magna or ford falcon that does 11L/100 km. Switch to a car that does 7-8L/100 km and you have just got the equivalent of a 38c fuel voucher.

(I know I know you don’t have the utility of your large as before ….)

The last NRMA open road mag I read seemed to focus a bit more on fuel consumption angle, but really it should be close to the #2 priority (#1 being safety ratings).

Re. #3, you’re right on auto clubs, Robert, but I think you’re wrong on the unions. There’s a strong tendency in a lot of unions to sell their membership explicitly on the terms of an apolitical insurance policy against exploitation or legal action, and as membership of a simple workplace assistance body. The conservative SDA, for instance, de-emphasises their rather militant lobbyists in favour of its role in ‘servicing its members’, a term that the organisers use frequently. Lots of other big unions do the same; the USU, NUW and AWU are ones I’m thinking of in particular (though I acknowledge the AWU, like everything, is different in Queensland). The role of unions as mutual benefit societies goes back to the eighteenth century and before, and the political role is a rather more recent addition.
The last paragraph of the blog entry proper asks a question that I think is very well answered by ‘trade unions’, especially those ones lucky enough to have substantial assets to insulate against falling membership.

In one review in the body of the text they did say it was “very thirsty” and in the little wrap up of pros and cons didn’t even mention poor fuel economy.

Having dabbled on the edge of motoring journalism, I can tell you something categorically: bad reviews mean no more access to review vehicles. If you say something is rubbish, the PR dolly wags her finger and shuts the drawer with the car keys in it. It’s why good, critical car magazines only last about 6 months.

I think the status “not for profit” should be banished from the law books. I do not think any activity, institution, corporate body, or individual should ever be exempt from taxation. With no tax exemption laws, there would be no tax evasion/avoidance industry.

Liam could you explain this in more detail please?
“The role of unions as mutual benefit societies goes back to the eighteenth century and before, and the political role is a rather more recent addition.”
My understanding of the development of unions was simply the response of workers uniting against employers in an attempt to gain better wages/conditions etc.. In my mind that is very specifically and clearly a political aim/role. Mutual benefit against a common enemy, ‘united we stand, divided we fall’ sort of thing.
What am I missing?

So here’s a question for Rob (and any NRMA members) – does your RACV membership entitle you to vote in the RACV’s internal elections. From memory (dim, of the 1970s) within the RACV there’s an RACV Club – or used to be, with the whole gentleman’s club rigmarole of requiring new members to be nominated by an existing member, approved by the committee, etc.

If your RACV membership doesn’t entitle you to vote in elections, or examination of the RACV constitution shows that the vote is gerrymandered, why not switch to a commercial provider like Ultra Tune? They might kick in to the road lobby too, but at least they’re not pretending that their interest in you is anything other than charging you what they can get for whatever standard of service you’re prepared to put with at the price.

The role of unions as mutual benefit societies goes back to the eighteenth century and before, and the political role is a rather more recent addition.

Yes true, although the idea that ‘trade uninos’ as such existed prior to the 18th century is misplaced. The role of unions as organisers of political and social opinion coincided with the abolition of the property qualification for the franchise, and as such didn’t really get going until everybody had the vote, although of course early unions were the backbone of the Chartist movement.

I very much hope that unions take care of their assets, and ensure they are substantial, since they will always remain a mere fraction of the assets and resources brought to bear on public policy that industries like for example, the financial services industry, brings to bear on public policy.

I think you will find Liam, that members expect their union to lobby on issues and for policies they support. This is understood to be part of the ‘deal’ and whether it is described as ‘servicing’ or ‘organising’, union members have never been more ready from what I have seen over the last two years, to bring their financial and organising resources to bear on issues they feel strongly about. The detail of Workchoices deeply shocked members of unions, as opposed to officials and the like because the latter had been aware since 1996 that if they ever got control of the Senate, the conservative parties would strike.

Union members veyr much like the idea of an independent ‘fund’ that can be used to pursue issues they care about, and a union leader who did not do this, and spend time and money on such activities, in relation to OH&S, Superannuation, Maternity leave and the like, would not last long.

The political influence of big business is often, and justly, maligned. But there are cases where the (theoretically) not-for-profit nature of certain large organizations gives them a political reach far in excess of what an equivalent for-profit company would have – and it’s an influence that has been used for unfortunate purposes.

How would taxing the RACV, or any other not-for-profit organisation, materially reduce its ability to lobby? I understand that taxing it might reduce somewhat the amount the RACV can spend on lobbying, advertising, etc.

But let’s root this discussion in financial reality. The major form of taxation of corporations, which the RACV would become, is company taxation.

Company tax is levied on the profits of a corporation: the profits are what are distributed out of the company to its owners/shareholders.

Even for profit-making corporations, revenue ploughed back into the corporation isn’t taxed.

Robert doesn’t expect to receive a cash dividend for his membership of the RACV. He simply wants a service.

If Robert wants that service, but doesn’t want to be associated with the lobbying efforts of the RACV, then he is free to set up his own not-for-profit Automotive club.

Hannah’s Dad, the genealogy of the modern trade union movement includes a number of other tendencies as well as the overtly agitational. Mutual aid societies were extremely important to working people in the era before the social welfare state, and they paid for things like pensions for widows and incapacitated workers, for funerals, for education, not to mention for unemployment assistance. Unions whose members face legal action as a professional risk, and who can’t get ‘proper’ professional indemnity insurance, often join them for this precise role: Police unions, for instance, have nearly 100% coverage, because they’ve got the best misconduct lawyers. Owner-drivers join the TWU for similar reasons, for aid in legal disputes with contractors.
Of *course* both mutual aid and agitation are political, but then my argument is that workplace mutual aid is not any different in a philosophical sense from roadside assistance. With a simple change of terms, you’d join the ‘union’, and an ‘organiser’ would visit you pulled over on the side of the ‘workplace’ and put jumper leads across your flat battery.
…
I await, of course, correction for my antediluvian views on unions from the usual sources. No, I’ve never read Bill Hutt on the strike-threat system.

The RACQ will only support congestion pricing if the various governments build a massive ring road around the CBD and make it free. That’s right, a measure designed to stop people needlessly driving will only gain their support when they build something to encourage needless driving.

The RACQ are idiots, “The Road Ahead” is full of crap and the State Government and Brisbane City Council are in the grip of pro-road dogmatists who give lip service to public transport and refuse to do anything like add bus priority lanes and signals.

Yes, theoretically, you vote in elections, but it’s extremely difficult to mount a campaign against the existing board or their new preferred candidates. About the only person who’s succeeded is Patricia Piccinini (Stephen Mayne’s wife).

In my mind that is very specifically and clearly a political aim/role. Mutual benefit against a common enemy, ‘united we stand, divided we fall’ sort of thing.
What am I missing?

HD, the earliest unions were mutual benefit societies. Members joined to share their assets, as embodied in their subscriptions, for purposes such as burial charges, sickness benefits, or an insurance pay-out to the wife of the worker. they served to discipline the workers from within, because the worker had every incentive to be “steady” and “respectable”.

Eventually they evolved into the IR organisations that are more recognisable to the modern eye.

I think Robert’s case is that the RACV basically operates on the “road congestion threat system”.

In fact, Hutt’s thinking might be a source of insight for understanding the threat systems operated by other organisations – like the “no marching music for street parades threat system” operated by community based brass bands. The effectiveness of this threat system can be judged by actual levels of brass band membership.

My reply to HD crossed with yours, amused.
I think we’re all largely agreed. Let me rephrase it as a question: if the trades unions’ mutual aid role can’t be separated from their agitational role, why should motorists’ associations be expected not to lobby? Just because they take pro-Camry, anti-pushbike positions with which we don’t agree?
The argument against is identical to the classic conservative one that unions have no legitimate role other than enhancing workers’ happiness and productivity.

The [RACV] is headed by a board of directors elected by two different classes of members: Club members who number approximately 20,000 and who can vote for all of the board members, and roadside service members who have purchased emergency roadside assistance and number approximately 1.3 million but can only vote for specific directors and consequently have less representation at a board level. A third large group of non-voting members were created in 2006 when customers with renewable products such as insurance were offered ‘membership’.[2]

As you can see, only the 20,000 club members have a determinative voice in the composition of the Board.

Liam, I’m not arguing that their right to lobby should be stripped away. I’m just arguing that their not-for-profit status gives them largely illusory clout with governments and undue coverage in the media.

My further point is that anybody who is a member, including LP readers, should be aware of what they’re supporting. I was also wondering whether others who share similar concerns about their influence, but still need the breakdown assistance that the RACV provides, have found as alternatives.

I don’t think that’s at all a clear argument, Robert. The problem seems to be the questionable distinction between the entitlements of a mutual aid society run exclusively for the benefit of members, and a profitable insurance enterprise. If the RACV’s roadside assistance and insurance arms were to turn over no profit at all, would their clout and coverage be more acceptable?
I agree with the corollary to your argument though: if a company that trades on member service is ploughing its profits into lobbying rather than capital investment, it’s probably not providing the best product. Up with competition, in that case, I say.

Liam: my primary concern is that their “membership” base gets them treated seriously, when most of those members have no clue what they’re supporting. Furthermore, they’re funding their political lobbying (and the very swanky RACV club) out of profits from those clueless members.

FYI, Robert (and others), you should be aware that RACV is NOT a “not-for-profit” organisation. Put more clearly, it is a for-profit organisation, specifically a MUTUAL company. It doesn’t present itself as a charity or non-commercial organisation because it isn’t either. It is a business that happens to be owned by its customers. It also pays tax in the businesses that aren’t strictly in the mutual line.

The NRMA is split into two general areas of business: the motoring services side and the road safety industry arm. Motoring services includes all the mechanical service side of the business (breakdowns, road tests, etc). The road safety industry is an industry because they fund road safety research that is used to:

1) Address road safety problems by working with government bodies such as FORS
2) Used to help calculate insurance actuarial probabilities. ‘Risk’ in road safety research becomes translated into ‘opportunity’ in the entreprenuerial business model of insurance.

My problem with this system is that for the business model to perpetuate itself, the large motoring organisations need ‘problems’ that contain ‘risk’ so to create ‘opportunities’. In other words, there is not for-profit incentive to properly address road safety problems.

Beyond the issues to do with the relation between representation and advocacy (or lobbying), the motoring organisations should shift their focus from motoring advocacy to mobility advocacy. Instead of privileging an unsustainable technology of mobility (automobile and system of automobility), they should firstly do research on alternate patterns of dwelling/mobility, and secondly advocate for more sustainable models of mobility. This is not because more sustainable models of dwelling/mobility are needed, but because they are inevitable and the motoring/mobility advocacy groups should be worried about their survival.

Hmmm. Non-voting membership, eh? Might be a way for trade unions to get around the free-rider problem.

How would that work exactly? The legitamacy of the whole union depends on people who are members ie; fee payers, who get the ‘service’ (however defined) being able to ‘vote’ their representatives at every level, to ensure that what is done is ‘endorsed’. You are perfectly entitled to quibble about the efficacy of a particular vote in ensuring the accountability you believe appropriate, but ‘non voting members’ in a union context, is category confusion.

Well not really, amused. There really ought to be some kind of free-rider penalty for non-union workers in a workplace who benefit from union negotiations. It’s the same idea behind the fact that the NRMA/RACV will either refuse to come out to start your car, or slug you a hefty fee, if you haven’t taken membership.
You know, I can’t think of a good reason why *shouldn’t* there be a membership category for non-voting unionists, if they’ve some kind of bizarre ethical compulsion against unionism.

Liam,
So, hypothetically, if it could be shown that the unions were free-riding on the rest of us by the use of monopoly supplier of labour powers, you would not object to them being forced to pay all of us some form of compensation for that?
As an example, if it could be shown that building costs in general were higher as a result of the activities of certain unions, then the union would be sued by the building firms for that differential?
Hypothetically of course – but it does look at the “free rider” issue from another angle.

Assuming that unions actually did have any monopoly on the supply of labour in any given industry, which they don’t, and haven’t had for two decades or more…
Then from that angle and using the analogy, the monopolistic RACV/NRMA also ought to be forced to render assistance to non-members and pay some form of compensation to the RTA, for the higher costs its road-assistance monopoly caused. Eh? The moral, of course, being let’s leave hypotheticals to Geoffrey Fucking Robinson.
BTW, “unions free-riding on the rest of us”? That’s worthy of ACA. I tip my beret to you.

So, Liam, non-hypothetically, then – during the period when they did (in your opinion) have a monopoly on the supply of labour (as you claim they did) would you have actively argued for them to pay compensation for the use of that monopoly power?

Well no, because compensation was something you brought up, and I’d only be against monopolism if it could be shown that that monopoly power was an overall social and economic negative. Building workers being underpaid or the net cost to business? That’s a matter of hypothetical ideological choice.
Let’s put the interests of workers and business in a hypothetical room and have them fight it hypothetically out.

Too close for hypotheticals—I’m switching to assertions.
Lateness is not a cost “to us all”. That’s a matter for negotiation between developers, contractors, subcontractors, and employees. If they can’t sort out a reasonable working arrangement between themselves without trying to crush each others’ negotiating positions, they should try their hands at another industry.

In fact every worker owes an amount of money to every union member whose activities and work ensure the boss is prepared to pay a wage premium to either keep the union away, or limit its efficacy by paying as close to the union premium as they have to, to ensure their goals. Every worker who enjoys leave arrangements inlcuding annual, sick, long service and family leave, owe a bunch of people whose work is largely voluntary, a very great deal indeed, including all those who spent time ‘politically agitating’ for the concept of payment when not ‘in employ’, that so amazes US workers.

How ’bout we analyse that Andrew? Or do you think the millions of person hours that all that work repesented, (and still represents) and the premiums paid to people who aren’t union members, in order to ensure they stay that way, were/are entirely wasted, and could safely be ditched?

Gosh. A driver that doesn’t want better roads or representation to government (as a motorist) and thinks he’s typical of all drivers. I dare say the vast majority of RACV/NRMA members (even the ones just with roadside assistance) want a better deal for motorists. Who better to lobby on their behalf?

At least the RACV represents my interests AND provides a valuable service. Unlike dozens of other parasitic tax-free NGOs I can name Greenpeace.